SAIPA's Professor Rashied Small explains the ways in which accounting will change within five years.
“When discussing the future of accounting, the conversation usually veers to the digitisation of the profession or the role Artificial Intelligence (AI) will play in transforming the practitioner’s duties,” says Professor Rashied Small, executive of Education and Training at the South African Institute of Professional Accountants (SAIPA).
However, he explains that there are more predictions that can be made about how accounting will or should evolve over the next five to ten years.
Rashied believes that technologies like AI, Internet of Things (IoT), blockchain and cloud computing will continue to disrupt classical accounting, but won’t replace accountants. Practitioners’ value propositions will move away from manual transaction entry, compiling reports and number crunching.
“Instead, they will channel automatically generated insights into actionable business development initiatives, risk management plans, flexible and sustainable business models, and much more,” he says. “In short, today’s accountant will be tomorrow’s strategic advisor.”
According to SAIPA’s strategic vision, Professional Accountant (SA) who want to become “value-added business advisors”, must have competencies in:
- Creating value (strategic business advisor),
- Enabling value (operational business advisor),
- Preserving value (risk management advisor), and
- Reporting value (business reporter).
This means that they need to embrace technology while developing vital soft skills, like creativity, problem solving and critical thinking, to intuitively deliver powerful solutions.
Persistence of accounting
The US Bureau of Labour Statistics predicts a 10 percent growth in the demand for accountants and a 19 percent growth in the demand for financial managers until 2026.
“With the need for accountants growing worldwide, a similar projection would be valid for South Africa,” Rashied says. “The accountant’s services should remain a key business function for at least the next decade.”
According to a quick analysis of the membership count of some of South Africa’s PAOs shows a gender ratio of roughly one women accountant to every two men. The composition of SAIPA’s female members has increased from 28 percent in 2010 to 47 percent in 2018.
“It is therefore not a prediction but a fact that the profession needs to change dramatically over the next decade.”
He suggests that firms must actively encourage women, who have been marginalised in the past, to enter the profession and give them assurance of equal pay, opportunities and treatment.
Over the next five to 10 years, a new generation of accounts will have entered the workforce. To ensure that this new generation represents the true demographics of South Africa, South Africa needs more black accounting candidates today.
Many young black Africans face economic constraints. To address these, Rashied says South Africa needs to provide stronger programmes to help them reach their goal, including subsidised education, possible earn-while-you-learn opportunities, and career support.
In the wake of several high-profile scandals, South Africa has had to develop stricter laws in an attempt to curb misconduct. “By 2030, legislation governing accounting practices will be even more restrictive and specially appointed industry watchdogs with legal clout could exist,” Rashied says.
The Reports on the Observance of Standards and Codes (ROSC) published in June 2013 recommended that both the auditing and the accounting professions should be regulated. PAOs, including IRBA, proposed regulations of the accountancy profession to the National Treasury. However, the discussion on this matter has been delayed.
Rashied says that global standards bodies have begun asking difficult questions to develop new standards that enable automation while still protecting the public interest.
“Does the quality of historical data affect AI’s decision-making abilities? Can AI learn unethical behaviour? How can accountants give assurance on an AI’s financial assumptions based on data too large for humans to analyse? Could AI’s spontaneously invent cryptic accounting processes and should we stop them?”
These standards will, therefore, become much more sophisticated, regulating both humans and machines.
According to Rashied, tertiary education, initial professional development (IPD) and continuing professional development (CPD) frameworks will evolve to complement technology adoption.
He points out that they should also take cognisance of the professional accountant’s ever-changing role in response to this trend.
“As mentioned, soft skills will enhance the practitioner’s ability to bring meaningful solutions to the table based on the insights generated by intelligent systems. So they will feature prominently in these programmes.”
Many future accountants, now operating at an advanced strategic level, may even choose to pursue advanced qualifications, like an MBA.
Embracing the future
“While accountants will still be in demand for quite some time, they must start preparing themselves to move in synch with the forces that will shape the industry over the next decade,” Rashied advises. “By doing so, they will promote themselves to a more valued position than ever.”